Time to rebuild EM exposure, says top Alt Ucits manager

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Alternative Ucits A-rated manager Maurizio Novelli has turned bullish on the prospects for the emerging markets and is keen to add more weight to the developing world in his multi-strategy fund.

According to his most recent factsheet, the Lugano-based manager is assessing options for his €562 million ZEST Global Strategy fund. he said:

'At this point I think the conditions to rebuild long positions on emerging markets and short on Eurostoxx have emerged,' he said.

'Fiscal policies in Europe will remain restrictive, whereas in Asia and Latin America expansionary fiscal policies can instead be implemented. And, the weak US dollar results in an increase in capital flows to the emerging markets.'

Novelli, at present, has exposure to emerging market debt and his major currency positions on the long-side are to the Turkish lira, Australian dollar and the Brazilian real.

However, his optimism excludes the emerging European picture, where is currently short the Czech koruna.

'This position also provides adequate protection in the event of negative situations in the financial markets, as the Czech koruna tends to fall when risk appetite diminishes,' he said.

Currency also plays an important role in Novelli's outlook.

'Overall I believe that the government bonds of EU's peripheral countries have entered into a sideways market.'

Looking at Europe as a whole, Novelli said he does not anticipate any improvement in the fortunes of the eurozone over the coming 12 months, with Germany heading towards recession along with other European nations.

The ZEST Global Strategy fund has returned 19.28% over the past three years. This compares to the average manager in the Citywire Alternative Ucits Multi Strategy category, who has returned 10.65% over the same time frame.